Employers in the private, for-profit sector often want or are asked to provide unpaid internships. The Fair Labor Standards Act (FLSA), however, imposes restrictions on an employer’s ability to do so. The following requirements must be met for an intern to work for an employer without pay in the for-profit sector. If all of these requirements are not met, the intern is an employee and must receive minimum wage and be paid overtime.
1. The internship must be similar to training which would be given in an educational environment.
a. Structure it around a classroom academic experience.b. Do not just act like it is an extension of normal business operations.
2. The internship experience is for the benefit of the intern.
a. Provide interns with skills to be used in multiple employment settings.b. Permit the internship only if school credit will be granted upon completion.
3. The intern does not displace regular employees, but works under close supervision of existing staff.
a. Do not use an intern to fill an open job.b. Do not use an intern to postpone adding a position that will perform the same duties.
4. The employer that provides the training derives no immediate advantage from the activities of the intern, and on occasion its operations may actually be impeded.
a. Design the internship to include a substantial amount of job shadowing.b. Do not permit intern to perform same duties as an existing employee and provide more supervision of an intern than of other employees.
5. The intern is not necessarily entitled to a job at the conclusion of the internship.
a. Design the internship to have a fixed duration established prior to the start of the internship.b. Do not expressly or impliedly indicate to the intern that the internship is a trial period for employment or a “temporary to permanent” evaluation period.
6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.
a. Make sure the intern knows in advance that there will be no compensation and ensure that the intern has no expectation of compensation.b. Have the intern sign a carefully drafted internship agreement that includes provisions on “no compensation/no expectation of it” as well as the other requirements above.